The Treasury openly proposes ending payments on account and a “limited” transfer of tax powers to the communities
The Treasury provides new details about its approach to reform the tax system in line with what was agreed between the Government and the Generalitat for Catalonia. The Secretary of State for the Treasury and ‘number two’ of María Jesús Montero, Jesús Gascón, has proposed moving towards a new system in which communities that wish to do so can receive income in real time and not through traditional payments on account.
Gascón has detailed that they are working on an approach so that the income is distributed equally to the State and the autonomous communities so that it reaches all administrations “at the same time” with the financing rules that exist at that time.
A proposal that requires “important” regulatory changes because it would completely affect the current system of payments on account, under which the Government advances funds to the communities in anticipation of the collection for that year, but two years later it settles the difference when the real result of tax revenue is known.
This Friday at the XXXV Congress of Treasury Inspectors, Gascón offered several insights into the tax management model that the Treasury wants to introduce. It would be a “network” model in which communities that wish could participate in the management of taxes, but with assessed limits. It would always be within a “comprehensive” system and counting on the infrastructure of the state tax administration.
Something that is already applied in various taxes, but that could be extended with greater ambition to figures such as personal income tax or VAT. “We are willing to give participation to the regional tax administrations that wish to do so, following this model also in other taxes,” Gascón said.
The mechanism would always be “shared” and with “coordinated” work between the central and regional administrations. “Without seeking organic integrations or the disintegration of things that already exist,” Gascón pointed out.
In any case, this shared transfer would have well-defined limits and would go little by little. “It is not a vague or unconditional delegation of a competence that can be key,” Gascón explained. The number two of the Treasury thus clearly distances itself from the approaches of ERC, which has prepared a bill with a schedule to deliver personal income tax exclusively to the Generalitat.
Specifically, the Secretary of State for the Treasury has made it clear that it is not the time “in the phase we are in” to think about giving up issues such as the control of taxpayers with economic activities, international taxation or tax crimes. “It would be going against economies of scale and effectiveness and efficiency to open the delegation when we have not even started kilometer one,” he added.
In any case, Gascón has stressed that for this to happen, a modification of the laws that govern the regional financing system must be approved, something that would be quite complex with the current parliamentary arithmetic. “Over the next few weeks or months we will be able to tell you specific things,” added Montero’s number two, before a large audience of tax inspectors who have been very critical of the Government’s approaches in this regard.
